BEWARE of CHINESE BEARING GIFTS: Why China's Direct
Last working version before publication in Julien Chaisse ed., CHINA'S THREE-PRONG INVESTMENT STRATEGY: BILATERAL, REGIONAL, AND GLOBAL TRACKS (London: Oxford University Press, February 2019) BEWARE OF CHINESE BEARING GIFTS: Why China’s Direct Investment Poses Political Challenges in Europe and the United States Sophie Meunier* From a non-existent player fifteen years ago, China has now become one of the largest senders of Foreign Direct Investment (FDI) flows in the world. By and large, this new provenance of capital has been welcomed by host countries, especially given the drop in other sources of FDI in the wake of the American financial crisis in the late 2000s. This new investment has created jobs locally, it has enabled to keep some troubled firms afloat, and it has often opened up the Chinese market for local companies. FDI is indeed the backbone of economic globalization and a crucial source of transmission of capital, technology, and people across borders. The exponential growth of Chinese direct investment, however, has also been accompanied in some cases by controversy and even resistance, both in developing and in developed economies. Around the world, critics have expressed fears and denounced some of the potential dangers of this investment, such as lowering of local labor standards, hollowing out of industrial core through repatriation of assets, and acquisition of dual use technology. Alarmist media headlines have warned against a Chinese takeover of national economies one controversial investment deal at a time. The ensuing political backlash has often received considerable media attention and increased scrutiny over subsequent deals. What explains the political challenges posed by the recent explosion of Chinese direct investment in the United States (U.S.) and the European Union (EU)? How and why have attitudes and policies in the West changed over the past decade towards Chinese FDI? This chapter considers two alternative explanations for the political challenges triggered by Chinese investment in Western countries.
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